Investment philosophy and process

We constantly review investment markets and our portfolios, so we can move rapidly to protect clients’ interests or capture new opportunities.

One of the key factors in enhancing performance, while managing risk. Within each asset class – equities, bonds, alternatives and cash – we use in-depth research to seek out the best individual investments.

We favour securities that we can buy and sell quickly. This allows us to make valuable tactical shifts, or move into cash if required.

Collectively, our 80+ investment professionals have decades of experience in macro-economic analysis and global asset allocation, asset classes and industry sectors, passive strategies (including counterparty risk) and third party funds.

More than simply a way to assess risk, our disciplined process and regular monitoring aims to ensure that portfolios always operate within the limits.

We begin with a clear understanding of individual needs and suitability in order to define an appropriate risk profile for each investment strategy.

We use a combination of asset classes as the building blocks for our portfolios: shares, bonds (government and corporate) and alternatives. Each asset class contributes to performance in a different and complementary way.

Shares represent a share of ownership in a business. They can offer good opportunities for generating long-term capital growth as well as income in the form of dividends but also carry a greater degree of risk.

Fixed income securities can be defined as a loan to either a company (corporate bond) or a government, for example the UK (Gilts). These loans can help to diversify portfolio returns away from equities, while also providing a more reliable source of income although it can come at the expense of capital growth.

Our allocations to alternative investments tend to be a small proportion of portfolios. We focus on liquid, alternative investments such as property, infrastructure, commodities and absolute return funds.

For all investment, our decision-making process includes a review of currency risk as part of the investment rationale for each asset class and security.

There can be prolonged periods when asset class returns deviate from their long-term trends. Therefore, we need to be willing to be active investors from both an asset allocation and security selection perspective.

We arrive at our tactical asset allocation decision through our quarterly Strategic Policy Committee (SPC) meetings. The committee is charged by our Chief Investment Officer and attended by all senior investment professionals. These meetings are complemented by an ongoing discussion of key economic and market trends.

Additional oversight is provided by monthly research meetings, weekly Multi Asset Committee meetings (where we discuss and review the tactical weightings) and a continuous flow of company management and fund manager meetings.

The purpose of tactical asset allocation is to enhance returns and minimise losses by making adjustments to the strategic framework. When making decisions, we aim to tilt portfolios to reflect prevailing market conditions, but not in a way that would alter a strategy's risk profile fundamentally.

We use a broad range of inputs at our Strategic Policy Committee (SPC) meetings, including:

Our proprietary asset allocation model, which looks at the relative attractiveness of different asset classes based on valuation, earnings and macroeconomic factors.

A systematic evaluation of market and economic data taking into consideration changes in growth, value, liquidity, currency and management.

The final application is at the discretion of the investment team. In other words, we combine collegially-generated investment strategies with tailoring to meeting individual objectives. As a result, all investors benefits from the disciplines of a centralised approach with the personal attention and customisation they require.

We are active investors not just from an asset allocation perspective but also in terms of security and fund selection. As well as adding value through tactical asset allocation, we seek to add value through the process of selecting individual investments.

All investment managers have both portfolio and analytical responsibility and contribute to the investment selection process.

Our investment managers are supported by research teams dedicated to finding opportunities in equities, fixed income and alternatives. Our research team is 20 strong with years of experience and is a valuable resource for our investment managers.

In line with our collegial approach, we hold regular research meetings to debate new investment ideas, confirm our security selection and listen to the views of external specialists.

The output from these meetings is a broad range of investment ideas - the Close Brothers Core Universe. They appear in portfolios in different ways depending on the mandate.

We have a proprietary risk and performance system which monitors adherence to risk profiles and provides analysis of the key attributes of portfolios as well as the sources of performance. This is important not only from a compliance and suitability perspective but helps inform our reviews with our clients.

Adding value through independent insight

We have created risk models with the assistance of Moody’s Analytics data. This enables us to:

• Identify the optimum mix of asset classes
• Match client needs with risks more precisely
• Achieve greater clarity over risk and return expectations

A collegial approach

Our 55 investment professionals work together in a close-knit environment, challenging each other’s views and sharing ideas and insights. With an average of 20 years’ investment experience, they are all members of a wider team, so there is always someone available to answer your questions.